The County has the primary responsibility to ensure that the necessary infrastructure for providing cost-effective collection and disposal services is available to all residences and businesses. The underlying foundation enacted by the state legislature is to provide for the health and safety of citizens of the County. PWES is responsible for managing and ensuring the delivery of these services through combination of working with different agencies, private business and private-sector vendors. It ensures that revenue resources are adequate to provide these services. Its overall purpose is to provide citizens and businesses of Marion County with an environmentally responsible and cost-effective system for managing solid waste through quality, cost-effective and uninterruptible services.
Funding Obligations
PWES operates as a public utility through an enterprise fund. The revenue needed to meet the expenditure requirements of the program is totally provided by tipping and franchise fees, the sale of power, and revenue from the sale of recycled material. As an enterprise fund, there is no reliance on federal, State or local taxes. An enterprise fund mandates that financial obligations for delivery of service, as well as the associated environmental risk, must be in place. This often includes the need for contingency resources and/or reserves.
The purpose of any utility is to provide uninterrupted service to its customers. PWES assures this through three functions. First, it generates the revenues necessary to operate the service system. Second, it provides the capital and reserves required for system improvements. Third, it prepares for contingencies to minimize interruptions in service and provide rate stability.
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The Enterprise Fund
The Marion County Solid Waste Enterprise Fund was established in 1987, when the Governmental Accounting Standards Board codified its financial reporting requirements. As mentioned, it is primarily based on the tip fees for direct services, as well as the sale of energy from the WTEF. Many public works utility operations such as wastewater or water districts typically use enterprise funds. The enterprise fund may manage its revenue resources to provide internal financing for capital projects as well as for daily operations. As an enterprise fund, the County can issue revenue bonds and repay the debt through user fees. The fund’s annual revenue requirements are developed through the County’s budget process. The breakdown for PWES’ FY 2008 - 2009 budget is presented in Figure 7-3 and Table 7-1.
PWES’ revenue continues to follow an historic trend to exceed its annual operating expenditure. This is a result of the County’s overall guidance to provide a fiscally responsible and managed approach for these services. Revenues in excess of annual expenditures are typically placed into dedicated reserve funds. These reserve funds are intended to be used for capital investments, either for new facilities or replacement of existing facilities, resources for post-closure maintenance of existing landfills, and contingency funds related to potential environmental liabilities or unforeseen conditions. Dedicated reserve funds are in place to ensure that disposal fees in Marion County remain stable and allow capital project funding without incurring additional debt.
This longtime strategy employed by Marion County has resulted in rate stabilization. The current rate of $67.45 per ton has been in place since 1992. There have been no adjustments to the base rate during this timeframe. During this same period, the County has continued to grow its resources to adequately fund its known and unknown contingent liabilities, as well as to implement programs to reduce waste and recycle materials.
Expenditures / Facility Operations and Management
The revenue requirements to fund the programs and provide the services are reviewed on an annual basis. PWES establishes these revenue requirements in four different general categories. These include:
1. Administration
2. Waste Reduction and Recycling 3. Site Operations
4. Engineering Support
The administration and administration support services for the solid waste management operation represents 7% of the entire budget. This includes the direct administrative activities of PWES, as well as support administrative activities from other County Departments. The administrative support activities include legal, financial, accounting, and other support services, including allocation of time for the Board of Commissioners. This budget is typically referred to as overhead and administration for most public utilities. The 7% total allocation for overhead and
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administration is well within industry standards for public utility operations, which can typically be between 10-15%.
Figure 7-3 – Projected Expenditures – FY 08-09
Table 7-1 – Expenditures by Operations
Expenditure 2007 PWES Administration $ 628,166
Admin. Support Services $ 889,485 Recycling $ 809,699 Engineering $ 592,753 Waste-to-Energy Facility $ 8,615,900 Transfer Station Contracts $ 2,202,900 Operation/ Transport Service Contract $ 1,691,000 County Direct Operations $ 1,453,747 Capital Outlay $ 1,255,000 Transfer Contingency $ 1,720,000
Total $19,858,650
The waste reduction and recycling effort represents 4% of the total budget. This budget is primarily for labor and materials used in carrying out waste reduction programs. This includes education and promotion programs defined in this Solid Waste Management Plan. It does not include the direct services provided at each
PWES Administration 3% Admin. Support Services 5% Recycling 4% Engineering 3% Waste-to-Energy Facility 43% Transfer Station Contracts 11% Operation/ Transport Service Contract 9% County Direct Operations 7% Capital Outlay 6% ContingencyTransfer 9%
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facility for recycling and reducing waste. Because the County owns and operates certain facilities, it employs an engineering and environmental support services group, which represents 3% of the budget. Engineering services are provided at the BI and NMCDF, as well as supporting activities at other operations as required. Site operations and transportation services represent 9% of the budget. This includes the gatehouse operations as well as contracts with private vendors. PWES does not directly operate vehicles to transport commodities or residuals, as all work is contracted with private-sector vendors.
Roughly 55% of the expenditure budget is for direct operations of the transfer stations and the WTEF. These facilities are privately owned but are operated under contracts with the County. PWES collects all fees and pays these vendors for services as stipulated in their contractual obligations. The contract for the operation of the WTEF is expected to expire in 2014. The County may begin the process to renegotiate extension of that contract.
In October of 2008, the County retired the final debt service for the WTEF. Annual debt service payments were approximately $4 million per year. As a result, the overall financial liability of the County has been reduced, thus providing additional resources for solid waste programs and other purposes. The availability of these resources further enhances the County’s ability to maintain rate stability and continue to expand waste reduction services to citizens and businesses of Marion County.
Revenue Sources
PWES’ revenue sources include user or tip fees, energy sales generated by the WTEF and sales from material recovery, interest, and franchise fees from private collection companies. (Figure 7-4 and Table 7-2) The revenue for FY 08-09 is projected to be approximately $20.2 million. About 70% of the revenue is generated from disposal fees and 23% from energy sales. The remaining 7% comes from interest, recycling revenue, franchise fees and transfers from other departments.
PWES manages and operates the gatehouses at each of the facilities receiving waste throughout Marion County, except for the MRRF. Private and commercial vehicles are weighed and charged a unit price when they use the facility. The current charge is $67.45 per ton for commercial companies at the WTEF and at transfer stations. Individuals that choose to haul their own waste to transfer stations, referred to as self- haulers, may do so and are charged $87.45 per ton. The difference in the tipping fees represents the cost of operating the transfer facilities and the transportation to the WTEF or to other disposal sites. PWES reviews tip fee revenues annually to determine if they are adequate to meet the revenue requirements through its budget and rate review process.
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Figure 7-4 - Projected Revenues - FY 08-09
Table 7-2 – Revenues by Sources
Electricity Sales $ 4,700,000 Tipping Fees $ 14,106,000 Interest $ 507,000 Recycled Material Sales $ 350,000 Franchise Fees $ 260,000 Transfer & Other $ 284,000
Total $ 20,207,000
To complete this budgeting process, PWES must review its operations as well as the programs and services to be included in its annual budget. Historically, PWES has considered the recommendations and priorities established in the SWMP as guidance for managing the resources and programs to be implemented each year.
As previously mentioned, the County has done a formidable job of managing revenues and expenditures, such that the disposal rate for tip fees charged at facilities has not increased since 1992.
Reserve Funds/Unappropriated Fund Balance
The County maintains an unappropriated fund balance of approximately $25.7 million. Figure 7-5 shows the distribution of these unappropriated funds, and Table 7-3 indicates the amounts. As shown, the County has established $10.5 in capital reserves. These reserves can be used to make improvements to existing facilities, as well as to provide for expansion of services at existing facilities. In addition, there is roughly $7 million contained in reserves funds for both BI and NMCDF. These monies are intended to fund the contingent environmental liabilities for post-closure activities at these landfills. These funds are established consistent with State and federal guidelines. Electricity Sales 23% Tipping Fees 70% Interest 3% Recycling 2% Franchise Fees 1% Transfer & Other 1%
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Figure 7-5 – Unappropriated Funds
Table 7-3 – Unappropriated Funds
Undesignated Ending Fund Balance $ 11,199,065 Capital Improvement Reserves $ 7,500,000 BI Reserves $ 2,000,000 North Marion Reserves $ 5,000,000
Total $ 25,699,065
Within the unappropriated fund balance, there are approximately $11.2 million of contingency funds. These contingency funds were established to meet several ongoing responsibilities of Marion County to provide cost-effective services. It includes potential funds for items such as:
• Unknown contractual liabilities associated with operations of the WTEF • Unknown environmental contingencies related to the NMCDF
• Unknown operating contingencies to ensure uninterrupted service
• Funds to provide rate stability in the event of an emergency or unforeseen conditions
Because the County has established an unappropriated fund balance for these events, it remains a stable and healthy enterprise fund that can provide continued stability and uninterrupted services to County residents.
7.3 Needs and Opportunities
Marion County, through the oversight and daily operations of PWES, has continued to manage the solid waste system in accordance with the guiding principles. Through its leadership and by working effectively with service providers, local governments, businesses and citizens, they provide financial stewardship to ensure cost-effective
Undesignated Ending Fund Balance 44% Capital Improvement Reserves 29% Brown Island Reserves 8% North Marion Reserves 19%
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services. This stewardship is apparent by the fact that rates have not been raised since 1992. During this same period, the County has continued to adopt new programs to promote waste reduction and reuse as well as new services to recycle more materials.
By way of policies enacted by the Board of Commissioner and under the management and administrative oversight of PWES, the financial health of the solid waste enterprise fund as a whole is very strong. With this SWMP Update, there are new issues to be considered in order to continue enhancing services and to maintain this same leadership and financial performance.